Index for measuring convergence between objectives and practice of Islamic banking

Siddique, Zahid

doi:10.1108/imefm-09-2019-0392

Cited by 3 publications

(9 citation statements)

References 12 publications

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“…As mentioned earlier, this point is addressed by many studies (Choudhury, 2006;Dusuki and Abozaid, 2007;Farooq, 2012;Mohamed et al, 2008;M. Mohammed, 2011;Obaidullah and Latiff, 2008;Shamsudheen and Rosly, 2020;Siddique, 2021;Tarique et al, 2020;Usmani, 2008).…”

Section: Theoretical Implicationsmentioning

confidence: 90%

“…This very evidence again shows the difference between the Islamic banking concept and Islamic banking in action. As mentioned earlier, this point is addressed by many studies (Choudhury, 2006;Dusuki and Abozaid, 2007;Farooq, 2012;Mohamed et al, 2008;Mohammed, 2011;Obaidullah and Latiff, 2008;Shamsudheen and Rosly, 2020;Siddique, 2021;Tarique et al, 2020;Usmani, 2008). Furthermore, it is very important for policymakers in Iran to pay attention and try harder to modify the banking system based on the Islamic banking system objectives in practice.…”

Section: Iranian Islamic Banking Systemmentioning

confidence: 90%

“…Now, we want to present some of the many studies that tried to shows the difference between Islamic banking in practice and Islamic banking objectives and ideals including (Choudhury, 2006; Dusuki and Abozaid, 2007; Farooq, 2012; Mohamed et al , 2008; M. Mohammed, 2011; Obaidullah and Latiff, 2008; Shamsudheen and Rosly, 2020; Siddique, 2021; Tarique et al , 2020; Usmani, 2008). For instance (Siddique, 2021) tried to rank banks in Pakistan based on an index that he develops to measure the convergence between objectives and the practice of Islamic banking.…”

Section: Review Of the Literaturementioning

confidence: 99%

“…Besides in the practice of Islamic banking, some issues like economic development, progress, human well-being should be considered (Chapra, 2016; Furqani and Mulyany, 2009; Tarique et al , 2020). However, Islamic banking in practice does not completely match the objectives of Islamic banking (Siddique, 2021). Many studies claim that Islamic banking and finance are departing from the Islamic economic concepts (Choudhury, 2006; Mohammed, 2011; Obaidullah and Latiff, 2008; Tarique et al , 2020; Usmani, 2008) and they are operating based on conventional economics principal.…”

Section: Introductionmentioning

confidence: 99%

“…Overall, many studies claim that Islamic banks systems that operate in many countries do not follow the Sharia law completely and they may operate against the Sharia law in some cases. So the prohibition of only some operations that are opposed to Sharia law does not make a banking system completely Islamic and there are shreds of evidence that support this point (Shamsudheen and Rosly, 2020; Siddique, 2021). The Iranian banking system is claimed to be an Islamic banking system; however, it faces many challenges that some studies have mentioned (Akhtar, 2021; Erdoğan et al , 2020; Khan and Mirakhor, 1990; Masoudnaderianari and Bolverdi, 2020; Parveen et al , 2015).…”

Section: Introductionmentioning

confidence: 99%

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Empirical evaluation of structure-conduct-performance paradigm as applied to the Iranian Islamic banking system

Asl

Rashidi

Ghorbani

2021

IMEFM

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Purpose This paper aims to investigate the impact of market structure and market share on the performance of the Islamic banks operating in the Iranian banking system based on the structure-conduct-performance (SCP) paradigm. Design/methodology/approach The Iranian Islamic banking system’s market structure is evaluated by using the econometrics method to test the validity of the traditional SCP paradigm. For this purpose, the authors estimate a simple regression model that is consisted of several independent variables, such as the market share, bank size, real gross domestic product, liquidity and Herfindahl-Hirschman index as a proxy variable for concentration and one dependent variable, namely, the profit as a proxy for performance. The panel data includes a data sample of 22 Islamic banks operating from 2006 to 2019. Data are extracted from the balance sheet of Islamic banks and the time-series database of the Central Bank of Iran and World Bank. Findings The study’s findings indicate that both concentration and market share have a positive impact on the performance of banks in the Iranian Islamic banking system. This result is contradicted with both traditional SCP and efficient structure hypotheses; however, it confirms the existence of oligopoly or cartel in the Iranian Islamic banking system that few banks try to gain the highest share of profit and maintain their market share by colluding with each other. This result is in contradiction with other research studies about the market structure in the Iranian banking system that claimed that banks in Iran operate under monopolistic competition. In addition, it shows that the privatization of some banks in Iran does not improve and help competition in the Iranian banking system. Originality/value This paper is a pioneer empirical study analyzing the market structure, concentration and collusion based on the SCP paradigm in Iranian Islamic banking. The results of the study support the existence of collusive behavior among the Islamic bank in Iran that is not aligned with Sharia. This study clearly shows the difference between ideal Islamic banking and Islamic banking in practice in Islamic countries. This clearly indicates that only prohibiting some operations like receiving interest, gambling and bearing excessive risk is not enough. In fact, the Islamic banking system should be based on the Sharia rule in all aspects and much more modification and study have to be done to achieve an appropriate Islamic banking system. These possible modifications to overcome the issues of cartel-like market structure and collusive behavior in the Iranian Islamic banking system include making the Iranian banking system more transparent, letting foreign banks enter the Iranian banking system and minimizing the government intervention in the Iranian banking system.

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Section: Theoretical Implicationsmentioning

confidence: 90%

Section: Iranian Islamic Banking Systemmentioning

confidence: 90%

Section: Review Of the Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Empirical evaluation of structure-conduct-performance paradigm as applied to the Iranian Islamic banking system

Asl

Rashidi

Ghorbani

2021

IMEFM

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Islamic financial literacy and Islamic banks selection: an exploratory study using multiple correspondence analysis on banks' small business customers

Al-Awlaqi

Aamer²

2022

IJOEM

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PurposeAlthough Islamic banks offer superior financial services than other interest-based conventional banks, they could not expand their share and dominate the markets in several Islamic countries. This problem could be attributed to some causes not addressed. The current study proposes Islamic financial literacy as an important factor that could help aggress this problem. Due to a wide variety of Islamic financial services and the lack of understanding of these services, the banks' small business customers are indifferent between Islamic and interested-based conventional services to finance their business.Design/methodology/approachThis study uses the exploratory technique of multiple correspondence analysis to detect any potential role of Islamic financial literacy in customers' preference for Islamic banks over conventional ones. The potential effect was tested with other essential factors, such as the customers' age, gender, and educational level. This analysis was conducted on a data set from 2061 banks' small businesses customers using the mall-intercept survey method.FindingsThe study shows a low level of Islamic financial literacy among Yemeni banks' small business owners' customers. Furthermore, despite integrating some critical factors that could influence the actual bank selection process among Yemini banks' customers, the authors found a decisive potential role of Islamic financial literacy as one of the key determinants of bank selection preferences.Originality/valueThis is the first paper to explore the potential role of Islamic financial literacy on the actual selection between Islamic Banks and their counterparts: the conventional banks in Yemen. The research results could build a more comprehensive theoretical model on Islamic banks' customer behavior.

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Corporate social responsibility (CSR) practices in Islamic banks of Bangladesh

Bhuiyan

Darda

Hossain

2021

SRJ

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Purpose Corporate social responsibility (CSR) influences an organization in deciding its ethical approaches in the corporate practices and also important to maintain sustainable development. Islamic banks are capturing almost 40% of the total bank account holders in Bangladesh and contributing to the socio-economic and environmental development of the country through their CSR activities. The purpose of this paper is to investigate the impacts of CSR activities of Islamic banks for sustainable development in Bangladesh from the perception of the beneficiaries. Design/methodology/approach This study is based on a questionnaire survey of 200 conveniently selected beneficiaries from five purposively selected Islamic banks in Bangladesh. Respondents’ agreement score for various CSR-related activities has been observed in a five-point Likert scale and, finally, to identify the impact of CSR, exploratory factor analysis has been done. Findings Results revealed that respondents are expressing strong agreement for almost all the activities, and they are much satisfied with ongoing CSR activities by Islamic banks, which implies positive attitudes of beneficiaries regarding CSR activities. The results of factor analysis further confirm the perception of respondents toward CSR activities of Islamic banks in terms of social enhancement, education and health, socio-economic well-being and contemporary arts and culture. Originality/value The Islamic banks should enhance their CSR activities for socio-economic development, provide more allocation in education programs, increase sponsorship in sports events and assist in flourishing Bangladeshi arts and culture.

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Index for measuring convergence between objectives and practice of Islamic banking

Cited by 3 publications

References 12 publications

Empirical evaluation of structure-conduct-performance paradigm as applied to the Iranian Islamic banking system

Empirical evaluation of structure-conduct-performance paradigm as applied to the Iranian Islamic banking system

Islamic financial literacy and Islamic banks selection: an exploratory study using multiple correspondence analysis on banks' small business customers

Corporate social responsibility (CSR) practices in Islamic banks of Bangladesh

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